Digests

Holder v. Canada

A-654-02

2004 FCA 188, Sharlow J.A.

11/5/04

5 pp.

Appeal from Tax Court judgment ([2003] 3 C.T.C. 2114) in which appellant held subject to tax on deemed taxable capital gain of $75,000 in respect of shares of his corporation-- Taxpayer mistakenly filed election under Income Tax Act, s. 110.6(19)--Should not have attempted to make election as shares did not qualify for election--But as election valid, could not be revoked because of s. 110.6(28)(a)--Tax Court Judge erred as to effect of Income Tax Act, s. 4(4) (repealed and replaced by s. 248(28) effective July 19, 1995)--Election resulted in reduction of adjusted cost base of shares which, because of s. 40(3), resulted in taxable capital gain--Whether double reduction of adjusted cost base contravenes s. 4(4)--Tax Court Judge concluded s. 4(4) has no application in case because contrary intention evident--Reasoned s. 53(2) treats two adjustments (adjustments under ss. 110.6(21)(b) and 110.6(22)) differently and thus they are not same amounts--On facts of this case, adjustments under ss. 110.6(21)(b) and 110.6(22) same quantum and result from same event--Fact two statutory provisions have different objectives cannot justify inference double taxation intended-- Two provisions of general application--Double taxation possible, but not necessary result of combined operation-- Therefore, unreasonable to conclude Parliament intended both provisions to apply in taxpayer's situation--Nothing in language, context of provisions providing any evidence Parliament intended to displace statutory presumption against double taxation in s. 4(4)--Appeal allowed--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 4(4), 40(3) (as am. by S.C. 1994, c. 7, Sch. II, s. 23), 53(2)(u) (as enacted by S.C. 1995, c. 3, s. 14), (v) (as enacted idem), 110.6(19) (as enacted idem, s. 32), (21)(b) (as enacted idem), (22) (as enacted idem), (28) (as enacted idem, 1998, c. 19, s. 130), 248(28) (as enacted by S.C. 1996, c. 21, s. 60).